EBRD

Transition Report 2012 INTEGRATION ACROSS BORDERS

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Chapter 1

Country Transition Indicators

One disadvantage of the sectoral transition assessment described in the previous section is that it may not fully capture reform progress or backtracking in broader, cross-cutting indicators such as trade policy, privatisation or the enforcement of corporate governance standards and competition policy. The EBRD has been tracking developments in these areas for many years and has been publishing annual transition indicator scores since the Transition Report was first published in 1994. However, the weaknesses of these indicators, in terms of their strong subjective element and failure to take sufficient account of the institutional framework, prompted the development of the sector-based methodology discussed earlier in this chapter. Nevertheless, the traditional indicators still constitute a useful snapshot of where a country stands in some important aspects of transition. It was decided therefore to retain the country-level scores for one more year; future years are likely to see a significant modification to the methodology and coverage of these indicators.

Table 1.2 contains the scores for six transition indicators (large-scale privatisation; small-scale privatisation; governance and enterprise restructuring; price liberalisation; trade and foreign exchange system and competition policy) on the same 1 to 4+ scale as in Table 1.1, but with arrows representing upgrades and downgrades in this instance. There were no upgrades or downgrades in small-scale and large-scale privatisation, signalling a lack of appetite for buying or selling state-owned assets. In the governance and enterprise reform category, there was an upgrade for Latvia, reflecting significant efforts by the government to enhance the transparency of state-owned companies. The decision by the energy company, Latvenergo, to have its long-term bonds quoted on the local exchange and to comply with the resulting listing requirements was a positive step in this respect.

Table 1.2

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Table 1.2 -Country transition indicator scores, 2012
0 Large-scale privatisation Small-scale privatisation Governance and enterprise restructuring Price liberalisation Trade and foreign exchange system Competition policy
Albania 4- 4 2+ 4+ 4+ 2+
Armenia 4- 4 2+ 4 4+ 2+
Azerbaijan 2 4- 2 4 4 2-
Belarus 2- 2+ 2- 3 2+_ 2
Bosnia and Herzegovina 3 3 2 4 4 2+
Bulgaria 4 4 3- 4+ 4+ 3
Croatia 3+ 4+ 3+ 4 4+ 3
Estonia 4 4+ 4- 4+ 4+ 4-
FYR Macedonia 3+ 4 3- 4+ 4+ 3-
Georgia 4 4 2+ 4+ 4+ 2
Hungary 4 4+ 4- 4+ 4+ 4-
Kazakhstan 3 4 2 4- 4- 2
Kyrgyz Republic 4- 4 2 4+ 4+ 2
Latvia 4- 4+ 3+_ 4+ 4+ 4-
Lithuania 4 4+ 3 4+ 4+ 4-
Moldova 3 4 2 4 4+ 2+
Mongolia 3+ 4 2 4+ 4+ 3-
Montenegro 3+ 4- 2+ 4 4+_ 2
Poland 4- 4+ 4- 4+ 4+ 4-
Romania 4- 4- 3- 4+ 4+ 3+
Russia 3 4 2+ 4 4__ 3-
Serbia 3- 4- 2+ 4 4 2+
Slovak Republic 4 4+ 4- 4+ 4+ 4-
Slovenia 3 4+ 3 4 4+ 3-_
Tajikistan 2+ 4 2 4 3+ 2-
Turkey 3+ 4 3- 4 4+ 3
Turkmenistan 1 2+ 1 3_ 2+_ 1
Ukraine 3 4 2+ 4 4 2+
Uzbekistan 3- 3+ 2- 3- 2- 2-
Egypt 3 4- 2 3+ 4 2-
Jordan 3 4- 2+ 4- 4+ 2
Morocco 3+ 4- 2+ 4 4- 2
Tunisia 3 4- 2 4 4 3-

There was a competition policy downgrade for Slovenia because of the significant drop in recent years in the number of cartel cases, the failure to issue any fines in 2011, and continuing staff and budget reductions. Some countries demonstrated progress in implementing competition policy, although not sufficiently to justify an upgrade at present. In Armenia, for example, a number of changes improved the functioning of the law, including the reinforcement of sanction measures. Moldova's new competition law, passed by parliament in July 2012, has been aligned with standards prevailing in the European Union (which provided technical assistance), while in Russia the government approved a so-called "third antimonopoly package", which entered into force in January 2012. This reform is aimed at liberalising the antimonopoly regulatory framework and reducing administrative barriers. It contains important clarifications and refinements, for example, with regard to cartel agreements.

There were several upgrades in trade and foreign exchange liberalisation. In the case of Montenegro and Russia this was mainly due to their long-awaited accession to the WTO. Montenegro had originally applied as part of the Federal Republic of Yugoslavia (subsequently the State Union of Serbia and Montenegro) and then in its own right after independence in June 2006. A further achievement for Montenegro in the past year was the launch of EU accession negotiations, which should lead to even greater integration into EU and global trade structures. Meanwhile, Russia's WTO accession completed a process that began back in 1993 and took effect in August 2012. Many of the provisions of entry include transition periods of up to nine years.

There were also upgrades in trade and foreign exchange liberalisation for Belarus and Turkmenistan, two of the traditional laggards in reform. They were, however, either from a very low base and/or reversed previous downgrades. In Belarus the multiple exchange rates that had emerged as a consequence of regulatory administrative measures and large external imbalances were unified in October 2011 as the government agreed to devalue the official exchange rate. In addition, restrictions on exports of most consumer goods, introduced during last year's crisis, were lifted in February 2012. Turkmenistan passed a new law on foreign exchange regulations in October 2011, abolishing the requirement of pre-payments for exports and imports and allowing banks to conduct foreign exchange transactions with enterprises and individuals without seeking prior approval from the central bank. In another important step towards liberalisation, the Turkmen government decided in July 2012 to cancel the rationing of flour and loosen controls over meat prices.

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